Hotel Royal

[dydx]

unless i am seeing things, earnings seem super low, and even if you take the earnings from previous year before they renovated the hotel, its still very low...

Also company is net debt though gearing is ok level.

Unless they sell some properties which are not making much money, I dont see any catalyst for this counter to realise its NAV. Unless someone is targeting it for a GO.

Dividend payout is pretty crap too.

I guess by looking at earnings (i.e. PBT or NP) only, you may be missing the main point, as I think Hotel Royal and its financially conservative but shrewd top management/BOD has been doing a pretty good job over the years in creating/increasing shareholders' wealth, by acquiring under-priced hotel/commercial properties sitting on valuable freehold land and after that enhancing and running them well to derive higher FCF, and holding onto them for the long term to benefit from substantial increase in their land value over time.

The fact is that based on the company's paid-up capital base of $100.438m, Hotel Royal has over the years grown its hotels/properties portfolio to now having 5 hotels (2 in Singapore, 1 each in KL and Penang, Malaysia, and 1 in Bangkok) with a combined BV based on CMV of $485.5m (conservative), and an investment properties portfolio with a combined BV based on CMV of $96.7m, with the support of only a very small net debt. And this success is fully reflective in its latest (as at 31Dec13) NAV/share of $6.05 (conservative) - itself a historical high!

The company has been showing its true colours in the last 2 FY's by starting to account for the huge hidden reserves in terms of the true and substantially higher CMV of its freehold land holdings, by including the related revaluation increases - $119.325m in FY13, and $39.2m in FY12 - in its comprehensive income (see p1 of the latest FY13 full-year result announcement)…..
http://infopub.sgx.com/FileOpen/HRL_Anno...eID=283627

I just hope that the company starts looking at ways to unlock the huge value of some of its property assets, especially the old Hotel Royal on Newton Road.

[greengiraffe]

unless i am seeing things, earnings seem super low, and even if you take the earnings from previous year before they renovated the hotel, its still very low...

Also company is net debt though gearing is ok level.

Unless they sell some properties which are not making much money, I dont see any catalyst for this counter to realise its NAV. Unless someone is targeting it for a GO.

Dividend payout is pretty crap too.

I guess by looking at earnings (i.e. PBT or NP) only, you may be missing the main point, as I think Hotel Royal and its financially conservative but shrewd top management/BOD has been doing a pretty good job over the years in creating/increasing shareholders' wealth, by acquiring under-priced hotel/commercial properties sitting on valuable freehold land and after that enhancing and running them well to derive higher FCF, and holding onto them for the long term to benefit from substantial increase in their land value over time.

The fact is that based on the company's paid-up capital base of $100.438m, Hotel Royal has over the years grown its hotels/properties portfolio to now having 5 hotels (2 in Singapore, 1 each in KL and Penang, Malaysia, and 1 in Bangkok) with a combined BV based on CMV of $485.5m (conservative), and an investment properties portfolio with a combined BV based on CMV of $96.7m, with the support of only a very small net debt. And this success is fully reflective in its latest (as at 31Dec13) NAV/share of $6.05 (conservative) - itself a historical high!

The company has been showing its true colours in the last 2 FY's by starting to account for the huge hidden reserves in terms of the true and substantially higher CMV of its freehold land holdings, by including the related revaluation increases - $119.325m in FY13, and $39.2m in FY12 - in its comprehensive income (see p1 of the latest FY13 full-year result announcement)…..
http://infopub.sgx.com/FileOpen/HRL_Anno...eID=283627

I just hope that the company starts looking at ways to unlock the huge value of some of its property assets, especially the old Hotel Royal on Newton Road.

There is no doubt that management is capable. They are ex Far-East Bankers hence you can never doubt their abilities to constantly look out for bargains. However, apart from keep building up values, the unlocking part and the sharing part remains to be seen. Hotel Grand on the other hand has been quite pro shareholders in terms of sharing while St****** has been quite up to mark in sustaining high payout and should be relied upon for sharing one-offs should their redevelopment initiatives bear fruits.

GG

[kbl]

Good afternoon everyone.

This thread is Hotel Royal. Please keep it simple.

<vested>

Hello GG,

If you Must talk about St******, please post at the relevant thread and not here. Thank you.

[greengiraffe]

Good afternoon everyone.

This thread is Hotel Royal. Please keep it simple.

<vested>

Hello GG,

If you Must talk about St******, please post at the relevant thread and not here. Thank you.

Hi,

I m sorry if you misunderstood my posting.

Basically, I am merely drawing a comparison of payout amongst peer comparisons.

At no point in time have I mentioned that the management team here at Hotel Royal has not been capable. They being ex Far East bankers have their own way running their companies while other families such as Hotel Grand Central and St****** have different approaching of rewarding shareholders.

I have vested interests in all 3 companies and as far as I can remember, Hotel Royal has a straight forward flat dividend policy for a long time - this is the point that I am highlighting.

Once again I am sorry if you perceived it as using Hotel Royal thread as a posting to promote other stocks.

GG

[felixleong]

unless i am seeing things, earnings seem super low, and even if you take the earnings from previous year before they renovated the hotel, its still very low...

Also company is net debt though gearing is ok level.

Unless they sell some properties which are not making much money, I dont see any catalyst for this counter to realise its NAV. Unless someone is targeting it for a GO.

Dividend payout is pretty crap too.

I guess by looking at earnings (i.e. PBT or NP) only, you may be missing the main point, as I think Hotel Royal and its financially conservative but shrewd top management/BOD has been doing a pretty good job over the years in creating/increasing shareholders' wealth, by acquiring under-priced hotel/commercial properties sitting on valuable freehold land and after that enhancing and running them well to derive higher FCF, and holding onto them for the long term to benefit from substantial increase in their land value over time.

The fact is that based on the company's paid-up capital base of $100.438m, Hotel Royal has over the years grown its hotels/properties portfolio to now having 5 hotels (2 in Singapore, 1 each in KL and Penang, Malaysia, and 1 in Bangkok) with a combined BV based on CMV of $485.5m (conservative), and an investment properties portfolio with a combined BV based on CMV of $96.7m, with the support of only a very small net debt. And this success is fully reflective in its latest (as at 31Dec13) NAV/share of $6.05 (conservative) - itself a historical high!

The company has been showing its true colours in the last 2 FY's by starting to account for the huge hidden reserves in terms of the true and substantially higher CMV of its freehold land holdings, by including the related revaluation increases - $119.325m in FY13, and $39.2m in FY12 - in its comprehensive income (see p1 of the latest FY13 full-year result announcement)…..
http://infopub.sgx.com/FileOpen/HRL_Anno...eID=283627

I just hope that the company starts looking at ways to unlock the huge value of some of its property assets, especially the old Hotel Royal on Newton Road.

There is no doubt that management is capable. They are ex Far-East Bankers hence you can never doubt their abilities to constantly look out for bargains. However, apart from keep building up values, the unlocking part and the sharing part remains to be seen. Hotel Grand on the other hand has been quite pro shareholders in terms of sharing while St****** has been quite up to mark in sustaining high payout and should be relied upon for sharing one-offs should their redevelopment initiatives bear fruits.

GG

No matter how many times you try to promote or talk about St******, a value trap will still remain a value trap. I can give u another 5 years and the stock will still not realize its full NAV ^^

[felixleong]

Good afternoon everyone.

This thread is Hotel Royal. Please keep it simple.

<vested>

Hello GG,

If you Must talk about St******, please post at the relevant thread and not here. Thank you.

I agree, GG it really irritates us that you have to post about St****** in this thread. You have already been posting soooo much in the St****** thread and u have to post about St****** in a hotel royal thread...

[greengiraffe]

unless i am seeing things, earnings seem super low, and even if you take the earnings from previous year before they renovated the hotel, its still very low...

Also company is net debt though gearing is ok level.

Unless they sell some properties which are not making much money, I dont see any catalyst for this counter to realise its NAV. Unless someone is targeting it for a GO.

Dividend payout is pretty crap too.

I guess by looking at earnings (i.e. PBT or NP) only, you may be missing the main point, as I think Hotel Royal and its financially conservative but shrewd top management/BOD has been doing a pretty good job over the years in creating/increasing shareholders' wealth, by acquiring under-priced hotel/commercial properties sitting on valuable freehold land and after that enhancing and running them well to derive higher FCF, and holding onto them for the long term to benefit from substantial increase in their land value over time.

The fact is that based on the company's paid-up capital base of $100.438m, Hotel Royal has over the years grown its hotels/properties portfolio to now having 5 hotels (2 in Singapore, 1 each in KL and Penang, Malaysia, and 1 in Bangkok) with a combined BV based on CMV of $485.5m (conservative), and an investment properties portfolio with a combined BV based on CMV of $96.7m, with the support of only a very small net debt. And this success is fully reflective in its latest (as at 31Dec13) NAV/share of $6.05 (conservative) - itself a historical high!

The company has been showing its true colours in the last 2 FY's by starting to account for the huge hidden reserves in terms of the true and substantially higher CMV of its freehold land holdings, by including the related revaluation increases - $119.325m in FY13, and $39.2m in FY12 - in its comprehensive income (see p1 of the latest FY13 full-year result announcement)…..
http://infopub.sgx.com/FileOpen/HRL_Anno...eID=283627

I just hope that the company starts looking at ways to unlock the huge value of some of its property assets, especially the old Hotel Royal on Newton Road.

There is no doubt that management is capable. They are ex Far-East Bankers hence you can never doubt their abilities to constantly look out for bargains. However, apart from keep building up values, the unlocking part and the sharing part remains to be seen. Hotel Grand on the other hand has been quite pro shareholders in terms of sharing while St****** has been quite up to mark in sustaining high payout and should be relied upon for sharing one-offs should their redevelopment initiatives bear fruits.

GG

No matter how many times you try to promote or talk about St******, a value trap will still remain a value trap. I can give u another 5 years and the stock will still not realize its full NAV ^^

Hi Felix,

In life, never say never... so long as there are real efforts and they are not Con jobs like stock market manipulation (Punters' Clob stocks, Schips for examples), there is always a chance.

Half empty or half full, its your choice. I have different investment criterias and moreover I only aim to be a slow turtle and in for the long haul. Of late, I am more interested in business strategies than typical investors' focus of total returns over a year.

I have no ability in doing business and doing them well so I can only pick on Godfathers to ride on their business acumen.

To each his own, I am always trying to make the market more efficient by sharing what I read and think. Everyone is entitled to their opinions.

I have always been a greengiraffe and happy to be one.

GG

[dydx]

Share price performance wise - Hotel Royal vs. Hotel Grand Central (HGC), and STI…..
http://sg.finance.yahoo.com/q/bc?s=H12.S...I%2C%5ESTI

Since end-Feb14, Hotel Royal's share price has out-performed the STI by some 13% and HGC's by some 4%. HGC's last done share price at $1.145 (as at 21Mar14) is equivalent to 80% of its 31Dec13's NAV/share at $1.43 [Note: HGC's NAV/share will almost certainly fall further if the controlling shareholder Tan Family continues to opt to receive their share of the $0.05/share Final dividend in scrips]; whereas Hotel Royal's last done share price at $3.50 (as at 21Mar14) is equivalent to only 57.9% of its 31Dec13's NAV/share at $6.05.
http://sg.finance.yahoo.com/q/bc?s=H12.S...I%2C%5ESTI [HGC's FY13 full-year results announcement]
http://infopub.sgx.com/FileOpen/HRL_Anno...eID=283627 [Hotel Royal's FY13 full-year results announcement]
Just based on asset backing alone, if Mr Market continues to be value seeking, it looks like Hotel Royal has quite a good reason and still quite a lot of room to move higher.

[BlueKelah]

Share price performance wise - Hotel Royal vs. Hotel Grand Central (HGC), and STI…..
http://sg.finance.yahoo.com/q/bc?s=H12.S...I%2C%5ESTI

Since end-Feb14, Hotel Royal's share price has out-performed the STI by some 13% and HGC's by some 4%. HGC's last done share price at $1.145 (as at 21Mar14) is equivalent to 80% of its 31Dec13's NAV/share at $1.43 [Note: HGC's NAV/share will almost certainly fall further if the controlling shareholder Tan Family continues to opt to receive their share of the $0.05/share Final dividend in scrips]; whereas Hotel Royal's last done share price at $3.50 (as at 21Mar14) is equivalent to only 57.9% of its 31Dec13's NAV/share at $6.05.
http://sg.finance.yahoo.com/q/bc?s=H12.S...I%2C%5ESTI [HGC's FY13 full-year results announcement]
http://infopub.sgx.com/FileOpen/HRL_Anno...eID=283627 [Hotel Royal's FY13 full-year results announcement]
Just based on asset backing alone, if Mr Market continues to be value seeking, it looks like Hotel Royal has quite a good reason and still quite a lot of room to move higher.

Just for discussion sake, if asset backing is the only reason then this stock is not gonna move much in the short term. In Singapore market its always catalyst like asset sales/dividends, possibility of GO, increased earnings that drive stock prices. Just take examples like superbowl and guthrie, not moving much or just following the STI or property sector indices, then suddenly BOOM after GO news. Even the massive revaluation of Superbowl zhongsan hotel did not do much for its share price(i was one of the jokers that bought in around 50+cents when saw the revaluation news, luckily hiap hoe brothers came around and took my shares.)

Mr Singapore Market is definitely not value seeking, if you check out the other forums, most common investors are still contra/trading/TA people. Most of the time value in property related kind of companies is only realised when the assets are sold at a profit, and then the stock gets overvalued as people bid it up in anticipation of pay-out.

asset value in today's market is quite irrelevant to how the stock price moves for SG market, many property/hotel companies often trade at half of book value. Their high asset base is after all a requirement for their business and in fact for these type of businesses, potential earnings/revenue stream and payout should be considered much more than the asset base.

If hotel royal is just buying cheap hotels and refurb, it is not acting much different from a REIT. Big minus here is unlike Hospitality REIT, dividend and earnings are both poor.

The recent run up is more likely due to someone buying in as he was impressed by the revaluation or someone being tricked by the puny dividend. as you can see on the 27th March volume spiked up one day. More likely some insider knew about the phuket transaction and bought in.

At the moment I would call this stock a value trap until management starts doing some disposals!

[gautam]

From a div compoundation mid-long term view, imo, i dun find ho royal attractive.
Well, my strategy involves using div to enter more shares. So just to create 1lot would need me to have 70lots at 3.50(pb0.57), which amount to nearly 1/4m.
Means in 1yr, i might have gained only an extra of 1lot plus its possible rise in share price due to its rise in nav. Over a long term, still gain i agree, but too much cash for too little gain.

Gautam